Creative Designs makes intricate jewelry out of precious metal. The company is introducing a new line and needs to select a manufacturing process. Three options are available. The first involves using a mold to mass produce the design for pendants, earrings, and bracelets. The second option laser cuts the design from a block of metal using a pattern directed by the software. The third option builds the design out of metal powder (gold, silver, and bronze) via a 3D printer. The company is uncertain about demand for the new design.

a. If Creative Designs expects to sell 200 pieces of the new design, which process should it use?

b. Create a decision rule that specifies which process to select for different levels of demand.

Process 1 Process 2 Process 3 Fixed Cost $5,000 $10,000 $7,000 Variable Cost $10 $50 $30 Process 1 Process 2 Process 3 Fixed Cost $5,000 $10,000 $7,000 Variable Cost $10 $50 $30